Big business tries to crash local broadband party

In the 1890s, Lafayette, La., won a favorable ruling before the Louisiana Supreme Court that cleared the way for the city to create a municipal power system. The courts decision ended a long-running attempt by corporate interests to keep Lafayette out of the electricity business.

Earlier this year, the states Supreme Court again sided with the city. This time the issue was broadband. Corporate interests contended that it was none of Lafayettes business.

History is so eerily consistent over one century to the other, said Jim Baller at the Baller Herbst Law Group, which specializes in representing local governments and public utilities in matters involving telecommunications, cable TV, high-speed data communications and Internet access. Its amazing, he said.In recent years, big telecom companies have squared off against local governments in numerous broadband turf wars. Notably, Verizon won a major battle in 2004 when it persuaded Pennsylvania lawmakers to pass legislation that essentially puts municipalities out of the broadband business there. The law, in effect, gave telecom companies first right of refusal in those markets.

They fight in different ways, said Mark Lloyd, senior fellow at the Center for American Progress. Either they go to the state legislature, or they fight with the municipality and try to convince citizens that [municipal broadband] cant be done. Or they take it to court.

In Illinois, in the Tri-Cities region of the far-western Chicago suburbs, communities seeking to establish municipal broadband were surprised by the amount of disinformation and money telecommunications companies would pour into the fight, Lloyd said.

Since the Pennsylvania setback, the tide seems to have turned, Baller said. In 2005, industry heavyweights supported initiatives in 14 states to erect significant barriers to municipal broadband. All but one failed. Since then, big business has lost four straight.

Most recently, municipal interests prevailed in North Carolina. In Missouri, too, Baller said, its all over but the shouting.

The mayor of Scottsburg, Ind., was thrown into the fight on more than one occasion. In 2005 and again the following year, Mayor William Graham traveled to Indianapolis to testify against restrictive legislation before state lawmakers. The telecom industry argued that municipalitiesshouldnt be competing with private enterprise.

I agree with that, but when private enterprise doesnt meet the demands of the country, what are you going to do? Graham asked. They claimed they were serving all of these areas, but they were cherry-picking the businesses and getting those that were easy to serve.

Both bills died in committee.

- John Pulley

Scottsburg, Ind., never aspired to be a player in the broadband communications business. The town certainly wasnt eager to knock heads with giant telecommunications companies. As recently as a few years ago, no one in this Ohio Valley town of about 6,000 residents 30 miles north of Louisville, Ky., could have imagined that Scottsburg would become the dominant provider of broadband service in a nine-county area.

It just worked out that way.

The enticement of broadband has emboldened municipalities nationwide to think about getting into a business that has been the domain of powerful companies. Scottsburg and other municipal mavericks are blazing a trail for cities and towns that want to go down that road. Mostly they are places with names like Clifton, Crawfordsville, Lebanon, Linton, Richmond, Rising Sun and Trey, Ind.; Bristol, Va.; and Braintree and Holyoke, Mass., places that dont inspire telecom companies to fight a turf war for a share of their markets.

There was a lot of push from businesses in the area saying they needed high-speed business connections. Stacie Skinner, Citizens Communications

As cities and towns opt to undertake broadband delivery, they might do well to consult the road map produced in a tiny part of southern Indiana.

Shifting fortunes

Scottsburgs broadband saga began in 2002. Eager to juice the citys stagnant economy, which had lost manufacturing jobs to overseas competitors, the local government began considering the possibility of establishing a center for technology and entrepreneurship. A committee formed by the mayor to explore the plans feasibility visited regional colleges and universities, whose information technology experts advised Scottsburgs leaders to conduct an audit of existing IT infrastructure and business needs.

When we did that, we really opened a can of worms, said Mayor William Graham. We found out that telecommunications was terrible. It was just dial-up. Most of it was 56 kilobits/sec, if they were lucky.

A local manufacturer that procured work through bids placed on the Internet complained of slow connection speeds that jeopardized government defense contracts. Auto mechanics at the Chrysler dealership bemoaned the difficulty of accessing online repair manuals. Slow speeds frustrated medical transcriptionists who teleworked to jobs in Louisville.

There was a lot of push from businesses in the area saying they needed high-speed business connections, or they would have to relocate, said Stacie Skinner, director of operations at Citizens Communication, the citys broadband utility.

Hope for an easy solution dimmed when the telephone and cable companies rejected Scottsburgs appeals for broadband service. To sweeten its offer, the city proposed cash incentives and proposed forming a public/private partnership with the companies.

To no avail, Graham said. The economies of scale wouldnt permit them to provide those services.

Not ready to give up, Scottsburg officials issued a request for proposals to seek solutions. The replies, from consulting firms and contractors, all offered different directions to follow and different ways to do it, Graham said.

If you cant find a partner, I would certainly look into going wireless. Mayor William Graham, Scottsburg, Ind.

However, the common denominator was high cost, typically tens of thousands of dollars to study the issue and millions more to implement a solution. A proposal to encircle the city with fiber-optic cable would have cost $6 million, about $1,000 per Scottsburg resident.

It became clear that bringing high-speed Internet to Scottsburg without bankrupting the city would require self-sufficiency and creativity. Fortunately, the municipality operated an electric utility. Working through the Indiana Municipal Power Agency and the American Public Power Association, Scottsburg heard about Owensboro, Ky.

The Blue Grass States third-largest city had installed an $11 million fiber-optic system that uses wireless network technology to achieve last-mile data connectivity. The Scottsburg team was impressed with Owensboros system, if not its price. Graham sent a question to Mike Cowan, president of Wireless Connections, which had worked on the Owensboro project: Why couldnt you do it all wireless? Graham said his answer was, You can. 

Using a point-to-point system, Cowan said, the company could bring broadband to Scottsburg for $275,000. Extending coverage beyond the city limits to rural schools in Scott County would run an additional $100,000. The system would resemble those deployed in the Pentagon and Iraq, Cowan said, allaying concerns about security.

If its not secure, we certainly didnt want it, the mayor said.Satisfied with Cowans proposal, Scottsburg gave the project a green light.

Local expertise

The citys experience running a public utility proved to be an asset during the projects implementation.

The systems Internet point of presence is the citys Lifelong Learning Center, which Indiana Fiber Network serves. From there, the city deployed wireless equipment that communicates via the unlicensed 5.8 GHz frequency to 15 nodes called access units. It mounted the units on grain bins, water towers, utility poles and all manner of structures used by the sheriffs department, a radio station, the hospital, the cellular industry and four different water utilities. Technicians affixed additional units to towers erected by the city. The city uses Alvarions proprietary wireless system, which is a precursor to and has performance characteristics similar to products based on a wireless standard called 802.16d, known as WiMax.

Aside from a few minor equipment issues, such as damage from lightning strikes and electrical shorts caused by water contamination, the system has required minimal maintenance. We take a lot of extra time to make sure everything is watertight now, said Jim Binkley, director of Scottsburg's Municipal Electric Utility and broadband service.

The systems signal can hop among access units eight times, at a distance of as much as 34 miles between each one, without delays. From the access units, the signal fans out to end users via the 2.4 GHz frequency. The access units also operate at 900 MHz in some locations, which goes through the trees a little better, Binkley said. We have hilly terrain. We have to get creative to getcoverage.

In April 2003, a few months after the deployment started, the citys first broadband customer began receiving service. About 500 residents and businesses signed up for service in the first year, five times the projected total.

Its been a running game ever since, Binkley said.

The system now incorporates 41 nodes and provides service to more than 1,500 customers in nine counties. To keep up with demand, the city added a second installation crew this year. Bringing new customers online takes about a week for downtown residents and two to three weeks for rural customers.

Residents can choose between 512 kilobits/sec or 1 megabit/sec broadband speeds. Businesses have more choices, ranging from 128 kilobits/sec to 1.5 megabits/sec. The ratio of residential to business customers is seven to one.

After Scottsburg deployed broadband service, Verizon and Comcast also began offering it, despite their earlier protestations that the market wouldnt support it.

When cable and DSL came in, we had a drop-off, but Im seeing [customers] come back, Binkley said. I havent seen anything that looks like demand is leveling off.

The city has competitive advantages that allow it to go head-to-head with the big boys. It requires no service contracts, and it doesnt charge customers to rent its equipment. City residents get a single bill for water, electric, sewer and broadband service.

The most attractive feature of the citys broadband service could be its customer service. We offer something different, Skinner said. Its that small-town feeling. People like to know they can call and get a human instead of a voice prompt.

Despite Scottsburgs success, Graham advises other would-be municipal broadband providers to seek partners before going it alone. If you cant find a partner, I would certainly look into going wireless, he said.

Scottsburg has proved that municipal broadband isnt a pipe dream.Rural people want the convenience and quality of life that everyone else has, Skinner said. You build it, and they will come.